Kansas oil production rises, gas production declines in 2010

LAWRENCE — Oil production in Kansas rose and natural gas production dropped in 2010 as crude oil prices increased and gas prices remained weak, according to estimates from the Kansas Geological Survey at the University of Kansas.

Kansas oil production rose 2 percent between 2009 and 2010, from 39.5 million barrels in 2009 to 40.5 million barrels. Because of increases in crude oil prices, the value of the state’s production increased 28 percent, from an estimated $2.02 billion to $2.79 billion.

While natural gas production was down 8 percent from nearly 360 billion cubic feet (bcf) in 2009 to 332 bcf in 2010, the cumulative value of natural gas produced in the state declined just 4 percent, from $1.38 billion in 2009 to $1.33 billion in 2010. That’s because the average price of gas rose from $3.71 to $4.16 per thousand cubic feet (mcf).

“Renewed activity in oil production is driven by higher oil prices, which rose from around $20 per barrel in 2000 to current levels near $100,” said Survey geologist Lynn Watney. “In contrast, lower natural gas prices since mid-2008 have resulted in fewer wells drilled and production declines in many of the state’s mature gas fields.”

The price hikes for oil have led to more drilling and use of developing technologies, such as three-dimensional seismic imaging, in search of new oil fields and new drilling locations in existing fields.

A recent increase in the use of a new generation of horizontal drilling and completion technologies should extend the positive trend in oil production for years to come, Watney said.

“Oil production in Kansas has been increasing since 2003, reversing a long period of decline,” he said. “The number of producing oil wells and the success rates of drilling have steadily increased over the past decade, attesting to the vitality of the industry.”

Counties with increased oil production in 2010 range from the mature producing areas of central and south-central Kansas, including Ellis, Barton and Barber counties, to areas undergoing active exploration such as in Logan and Gove counties in northwestern Kansas.

Ellis County, which produced an estimated 3.3 million barrels of oil, continued to be the top producer, followed by Barton, Rooks, Haskell, Russell, Ness, Barber, Finney, Graham and Stafford counties.

The greatest amount of natural gas in Kansas is produced from the expansive Hugoton Gas Area in the southwest. Although production there has decreased, that decline slowed in recent years after regulations allowing closer spacing of wells were enacted.

“Following the permit of targeted infill drilling, new wells have exploited untapped zones of the giant reservoir that still contain gas of sufficient pressure,” Watney said. “In 2010, some 138 bcf, or about 378 million cubic feet per day, were produced from 7,684 wells in the Hugoton.”

Lower prices, however, discourage development and application of new technologies needed to better exploit the remaining gas in older fields, he said.

Natural gas production in the coal beds of southeast Kansas became profitable starting in the early 2000s and initially helped offset declines in Hugoton production. However, production of coalbed natural gas, also called coalbed methane (CBM), is now falling as production from existing wells declines naturally and few new wells are drilled.

“The peak year for drilling CBM wells in Kansas was 2006 when 1,598 wells were drilled, but in 2010 only about 30 wells were drilled,” said Survey geologist Dave Newell. “Since 2008, when CBM production peaked in the state, the price of natural gas tumbled from approximately $14 per mcf down to $4 per mcf and drilling has been on hold for additional CBM reserves in southeastern Kansas.”

An exception to the trend of slowing natural gas production in Kansas is found in Barber County, where drilling has increased since the early 1990s in the Mississippian chert fields.

Despite declines in southwest Kansas production, eight of the top 10 gas-producing counties in 2010 were in the Hugoton Gas Area. The others were Barber County in south-central Kansas and Neosho in the southeast.

Stevens County, which produced an estimated 48.8 mcf of natural gas in 2010, was the top producer, followed by Grant, Kearny, Haskell, Morton, Finney, Barber, Seward, Neosho and Stanton counties.

Current and historical production data for the entire state, as well as by county and field, are available at http://www.kgs.ku.edu/PRS/petroDB.html.